Quick notes:

 

  • There are distinct differences between CFPs and CPAs
  • Both kinds of professionals can help you keep your financial life in good shape<
  • Be sure to take the time to research and interview candidates

 

Maybe you feel that you need to seek the assistance of a financial professional so you can be sure you’re managing your money as efficiently as possible. Maybe you want to make sure that you’ve got everything in order for your business. Either way, if you’re looking into getting help it pays to understand more about your options.

Generally, people who are looking for the support of a financial pro turn to two kinds of service providers, a CFP or a CPA. What is a CFP? What is a CPA? We’ve got answers.

CFP: The details

The acronym CFP stands for Certified Financial Planner. These individuals are accredited professionals who have invested both time and money in obtaining a formal and sought-after CFP certification.

This process for their certification is rigorous, standardized, and detailed. It includes between 4,000 and 6,000 hours spent working in the field or serving as an apprentice to another CFP. Furthermore, the CFP Board of Standards administers and manages the route to certification.

How can a CFP benefit you? This professional is someone you would use to help you get your financial affairs in order. This person can help ensure that you’re living within your means and that you’re on track for your own retirement or to pay for college for your dependents. They can also help ensure that you have the right kinds of life insurance available and that you’re spending any surplus funds as wisely as possible.

CPA: The details

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The acronym CPA stands for Certified Public Accountant. This is a professional who has passed the rigorous CPA exam and fulfilled a number of state education and work experience requirements. Similarly to an attorney’s license, CPA licenses are issued by the state and vary from each. If someone moves from one state to another, they’ll need to get re-certified in their new location.

CPAs can work with individuals, nonprofit organizations or businesses of any size either as a directly paid employee or as a consultant. This professional generally tracks their client or employer’s income and expenses, managing cash flow documentation, reporting, annual or quarterly taxes, and more. Their expertise also allows them to make recommendations on new processes or other changes that their employer or client should make.

Is it possible that I need both?

Yes, there ARE specific times when someone may need help from both kinds of professionals.

Believe it or not, there are some people who find that they need help from both kinds of professionals. For example, a small business owner may find that they need a CFP to help them manage their household cash flow but they also need a CPA to help make sure that their business records are in order and that their taxes are filed accurately and on-time. Each person needs to make a decision about what is right for their own situation.

Professional matchmaking: Hiring the right person for you

If you’re looking to hire a CFP or a CPA, take time to consider what areas of your financial life you’ll need them to focus on. Be sure to screen all potential candidates for their expertise, their cost, and how well their approach matches your personality and spending habits.

To get started, ask for referrals from friends and colleagues that you know and try to do some online research if you can. As a final step, request an in-person interview before committing. This person will have a strong impact on the financial health of your home or business. It pays to be thorough when you’re bringing someone on board.

A deeper dive — Related reading from the 101:

 

 

Here are some habits you’ll need to lose if you want to get ahead financially.

 

 

Don’t be fooled into thinking you need to pay for these things.